Payment System Policy and Oversight Course
Federal Reserve Bank of New York
33 Liberty Street, 12th Floor Auditorium
(Final Day: Course moves to 13th Floor – Multi Purpose Room)
May 11-14, 2015
- 84 Participants -
Mr. Nacer-eddine Haddad
Director
Payment Systems
Bank of Algeria
Algeria
[email protected]
Mrs. Sheree Smiling Craig
Director
Project Management Office
Central Bank of Belize
Belize
[email protected]
Mr. Ivady Oliveira
Oversight
Payment Systems
Banco Nacional de Angola
Angola
[email protected]
Miss. Sonia Noriega
Analyst of Payment Systems Oversight
Payment System Oversight Department
Banco Central de Bolivia
Bolivia
[email protected]
Mr. Jorge Carlos Gagliano
Analista Sr
Gerencia Principal de Control y Liquidacion de
Operaciones
Banco Central de la Republica Argentina
Argentina
[email protected]
Mrs. Maurice Ane Casagrande Brandao
Head of Division
Banking Operations and Payments Systems
Banco Central do Brasil
Brazil
[email protected]
Mr. Luke Van Uffelen
Senior Analyst
Payments Policy
Reserve Bank of Australia
Australia
[email protected]
Mr. Roland Hellmann
Settlement Manager
Payment Systems Division
Oesterreichische Nationalbank
Austria
[email protected]
Mr. Muhammad Mijanur Rahman Joddar
Executive Director
Chittagong Office
Bangladesh Bank
Bangladesh
[email protected]
Mrs. Isabelle Reynders
Analyst
Prudential Supervision & Oversight
National Bank of Belgium
Belgium
[email protected]
Ms. Jamie Armour
Senior Analyst
Financial Stability Department
Bank of Canada
Canada
[email protected]
Mrs. Silvija Vojinovic
Senior Advisor
Payment Operations Regulation and
Development Department
Croatian National Bank
Croatia
[email protected]
Mr. Jan Susicky
Head of Payment Service Providers and
Financial Intermediaries Supervision Unit
Financial Market Supervision Unit
Czech National Bank
Czech Republic
[email protected]
Mr. Michal Volny
Financial Market Supervisor
Financial Market Supervision Department
Czech National Bank
Czech Republic
[email protected]
Mr. Patrick Gregoire
Principal Supervisor
DGMS3-ISO, Single Supervisory Mechanism
European Central Bank
ECB
[email protected]
Mrs. Anna Pliquett
Analyst
Payment and Securities Settlement Systems
Deutsche Bundesbank
Germany
[email protected]
Mr. Gabor Szendrey
Senior Auditor
Directorate Internal Audit
European Central Bank
ECB
[email protected]
Ms. Helen Leung
Manager
Financial Infrastructure Department
Hong Kong Monetary Authority
Hong Kong
[email protected]
Mr. Lorenzo Dal Bianco
Market Infrastructure Expert
Directorate General Market Infrastructure and
Payments
European Central Bank
ECB
[email protected]
Mrs. Cecilia Pinter
Senior Analyst, Overseer
Directorate Financial infrastructures
Magyar Nemzeti Bank (The Central Bank of
Hungary)
Hungary
[email protected]
Mr. Ayman Hussein
Head of Payment Systems and Business
Technology Sector
Payment Systems and Business Technology
Sector
Central Bank of Egypt
Egypt
[email protected]
Mr. Sushil Kumar Dwivedi
Assistant General Manager
Department Of Payment and Settlement
Systems
Reserve Bank of India
India
[email protected]
Ms. Maria de los Angeles Delgado de Alvarado
Industrial Engineer
Payment and Securities
Banco Central de Reserva de El Salvador
El Salvador
[email protected]
Ms. Sally Marintan Hutapea
Deputy Director
Department of Payment System Oversight &
Policies
Bank Indonesia
Indonesia
[email protected]
Mr. Timo Iivarinen
Economist
Financial Markets and Statistics
Bank of Finland
Finland
[email protected]
Mr. Daragh Cronin
Head of Payments and Securities Settlements
Payments and Securities Settlements
Central Bank of Ireland
Ireland
[email protected]
Ms. Maria Huhtaniska-Montiel
Project Manager
Banking Operations
Bank of Finland
Finland
[email protected]
Dr. Edoardo Rainone
Coadiutore
Payment System
Banca d'Italia
Italy
[email protected]
Ms. Andrea Friedrich
Deputy Head of Oversight Section
Payments and Settlement Systems
Deutsche Bundesbank
Germany
[email protected]
Ms. Yuriko Watanabe
Analyst
Payment and Settlement Systems Department
Bank of Japan
Japan
[email protected]
Mr. Ghassan Abu Shihab
Asst. Executive Manager- Payment Systems
Oversight
Payments Systems & Domestic Banking
Operations Department
Central Bank of Jordan
Jordan
[email protected]
Mrs. Sophie Kabon Langat
Manager
Banking Services, NPS & Risk Management
Central Bank of Kenya
Kenya
[email protected]
Mr. Min woo Choi
Junior Economist
Payment Systems Policy Team
Bank of Korea
Korea
[email protected]
Mr. Jasem Ali
Chief Accountant
Foreign Operation Dept.
Central Bank of Kuwait
Kuwait
[email protected]
Mr. Egons Gailitis
Head of Payment System Department
Payment Systems
Bank of Latvia
Latvia
[email protected]
Dr. Zainal Hasfi Hashim
Deputy Director
Payment Systems Policy
Bank Negara Malaysia
Malaysia
[email protected]
Miss. Jennifer Nicole Vella
Financial Analyst
Regulation and Oversight
Central Bank of Malta
Malta
[email protected]
Mr. Eduardo Tejeda
Special Studies and Projects
Directorate of Payment Systems
Banco de Mexico
Mexico
[email protected]
Mr. Gopal Kaphle
Deputy Governor
Nepal Rastra Bank
Nepal
[email protected]
Ms. Petra Steenbakker
Senior Policy Advisor
Market Infrastructure Policy Department
De Nederlandsche Bank
Netherlands
[email protected]
Mr. Nathan Lewer
Manager, Payment and Settlement Services
Financial Services Group
Reserve Bank of New Zealand
New Zealand
[email protected]
Mr. Musa Itopa Jimoh
Head, Payments System Policy and Oversight
Banking and Payments System
Central Bank of Nigeria
Nigeria
[email protected]
Ms. Elisabeth Lervik
Assistant Director
Interbank Settlement
Norges Bank
Norway
[email protected]
Mr. Muhammad Faisal Mazhar
Deputy Director
Payment Systems
State Bank of Pakistan
Pakistan
[email protected]
Mr. Asim Iqbal
Director
Payment Systems Department
State Bank of Pakistan
Pakistan
[email protected]
Mr. Maximo Raul Moquillaza
Payment Systems Specialist
Payment Systems Oversight Department
Banco Central De Reserva del Peru
Peru
[email protected]
Mr. Pawel Lysakowski
Head of Division
Payment Systems Department
Narodowy Bank Polski
Poland
[email protected]
Mrs. Otilia Gradinescu
Expert
Payments Department
National Bank of Romania
Romania
[email protected]
Ms. Liudmila Gruzdeva
Division Head
Department of the National Payment System
Central Bank of the Russian Federation
Russia
[email protected]
Mr. Hamad Alsuhaibany
Information Systems Examiner
Banking Supervision
Saudi Arabian Monetary Agency
Saudi Arabia
[email protected]
Mr. Reshaid Alreshaid
Information Systems Examiner
Banking Supervision Department
Saudi Arabian Monetary Agency
Saudi Arabia
[email protected]
Miss. Beggita Vital
Payment Systems Officer
Payment Systems Division
Central Bank of Seychelles
Seychelles
[email protected]
Miss. Fatima Mansaray
Assistant Director
Information Technology
Bank of Sierra Leone
Sierra Leone
[email protected]
Mr. Ben Ong
Assistant Director
Information Technology Department
Monetary Authority of Singapore
Singapore
[email protected]
Mrs. Simona Veghova
Senior Internal Auditor
Internal Audit Department
National Bank of Slovakia
Slovakia
[email protected]
Mrs. Maria Teresa Jimenez Alijo
Expert in the Settlement Systems Oversight
Unit
Payment Systems
Bank of Spain
Spain
[email protected]
Mrs. Maria Jose Garcia-Ravassa
TARGET2 - Banco de Espana Unit Manager
Payment Systems
Bank of Spain
Spain
[email protected]
Mr. Ratnayaka Mudiyanselage Jayawardana
Additional Director of Payments and
Settlements
Payments and Settlements Department
Central Bank of Sri Lanka
Sri Lanka
[email protected]
Mr. Lucien Nijman
Department Chief
Domestic Payments Department
Centrale Bank van Suriname
Suriname
[email protected]
Ms. Sara Edholm
Economist
Financial Stability Department
Sveriges Riksbank
Sweden
[email protected]
Ms. Flurina Strasser
Business Analyst
Banking Operations Analysis
Swiss National Bank
Switzerland
[email protected]
Ms. Wei-Chuan Chang
Deputy Section Chief
Department of the Treasury
Central Bank of China, Taipei
Taiwan
[email protected]
Mrs. Saowalak Tripojanee
Team Executive, Payment Systems Stability
Team
Payment Systems Policy Department
Bank of Thailand
Thailand
[email protected]
Ms. Leslie-Ann Des Vignes
Specialist
Payments System Department
Central Bank of Trinidad and Tobago
Trinidad and Tobago
[email protected]
Mr. Nuh Agah Tahmiscioglu
Assistant Specialist
Regulation and Oversight Division, Payment
Systems Department
Central Bank of the Republic of Turkey
Turkey
[email protected]
Mr. Jamal Al Shamsi
Assistant Manager
Banking Operation & Payment System
Central Bank of the United Arab Emirates
United Arab Emirates
[email protected]
Mrs. Anna Tvishor
Senior Specialty Risk Examiner
Information Security Team
Federal Reserve Bank of Chicago
US - Chicago Fed
[email protected]
Dr. Andrew Jales
Manager
Resolution Directorate
Bank of England
United Kingdom
[email protected]
Mr. Andrew Ching
Financial Analyst
Reserve Bank Operations & Payment Systems
Federal Reserve Board of Governors
US - FRS Board of Governors
[email protected]
Miss. Rebecca Hall
Policy Team Manager
Customer Banking Division
Bank of England
United Kingdom
[email protected]
Ms. Wendy Matheny
Policy Analyst
Cash Product Office
Federal Reserve Bank of San Francisco
US - San Francisco Fed
[email protected]
Mr. Malcolm Long
Manager
Payments Systems Supervision and Policy,
Financial Markets Infrastructure
Bank of England
United Kingdom
[email protected]
Mr. Max Ellithorpe
Financial Services Analyst
Financial Market Infrastructure Oversight
Federal Reserve Board of Governors
US - FRS Board of Governors
[email protected]
Mr. Mark Louis
Senior Manager, Custody, Settlement and
Liquidity
Market Services division
Bank of England
United Kingdom
[email protected]
Ms. Jennifer Getz
Sr. Supervision Analyst
Supervision and Regulation
Federal Reserve Bank of Chicago
US - Chicago Fed
[email protected]
Ms. Claire Brunner
Financial Services Analyst
Reserve Bank Operations & Payment Systems
Federal Reserve Board of Governors
US - FRS Board of Governors
[email protected]
Mr. Constantine Varvouletos
Specialty Risk Examiner
Supervision & Regulation
Federal Reserve Bank of Chicago
US - Chicago Fed
[email protected]
Ms. Yesel Lee
Financial Services Analyst
Reserve Bank Operations & Payment Systems
Federal Reserve Board of Governors
US - FRS Board of Governors
[email protected]
Mr. Scott Sloan
Financial Services Analyst
Reserve Bank Operations & Payment Systems
Federal Reserve Board of Governors
US - FRS Board of Governors
[email protected]
Ms. Mirjana Milutinovic
Financial Services Analyst
Reserve Bank Operations & Payment Systems
Federal Reserve Board of Governors
US - FRS Board of Governors
[email protected]
Mr. Jacob Rodriguez
Financial Services Analyst
Reserve Bank Operations & Payment Systems
Federal Reserve Board of Governors
US - FRS Board of Governors
[email protected]
Mr. Troy Causey
Financial Services Analyst
Reserve Bank Operations & Payment Systems
Federal Reserve Board of Governors
US - FRS Board of Governors
[email protected]
Mrs. Charity Nonde L Chikumbi
Analyst-Payment Systems Oversight
Banking, Currency & Payment Systems
Bank of Zambia
Zambia
[email protected]
Mr. Edward Kapili
Assistant Manager-Banking, Back Office
Banking, Currency and Payment Systems
Bank of Zambia
Zambia
[email protected]
Payment System Policy and Oversight Course
Federal Reserve Bank of New York
33 Liberty Street, 12th Floor Auditorium
(Final Day: Course moves to 13th Floor – Multi Purpose Room)
May 11-14, 2015
GLOSSARY AND ACRONYMS
Agreement
Corporation
Automated Clearing
House (ACH)
Corporation chartered by a state to engage in international banking: so
named because the corporation enters into an "agreement" with the
Fed's Board of Governors that it will limit its activities to those permitted
by an Edge Act Corporation.
A type of payment system designed to allow corporations and
consumers to reduce or eliminate the use of paper checks when making
routine high-volume, low value payments. ACH systems process large
volumes of individual payments electronically. Typical ACH payments
include salaries, consumer and corporate bill payments, interest and
dividend, and Social Security. Examples of private sector ACH
providers in the U.S. include VISA, the New York Clearing House, and
the American Clearing House.
Bank for
International
Settlements (BIS)
An international organization which fosters international monetary and
financial cooperation and serves as a bank for central banks. The BIS
fulfils this mandate by acting as (1) a forum to promote discussion and
policy analysis among central banks and within the international
financial community; (2) a centre for economic and monetary research;
(3) a prime counterparty for central banks in their financial transactions;
and (4) agent or trustee in connection with international financial
operations. The BIS was established in 1930 with head office located in
Basel, Switzerland.
Bank Services
Company Act
The Act requires FDIC insured financial institutions to notify their
appropriate federal banking agency in writing of contracts or
relationships with third parties that provide certain services to the
institution.
The transmission or processing of a group of related payment
instructions.
Batch Processing
Beneficiary
Person to be paid by the beneficiary’s bank.
Beneficiary’s Bank
Bank identified in a payment order in which an account of the
beneficiary is to be credited pursuant to the order.
Central Counterparty
(CCP)
An entity that is the buyer to every seller and seller to every buyer of a
specified set of contracts, e.g. those executed on a particular exchange
or exchanges.
Central Securities
Depository (CSD)
A facility (or an institution) for holding securities, which enables
securities transactions to be processed by book entry. Physical
securities may be immobilized by the depository or securities may be
dematerialized (i.e. so that they exist only as electronic records). In
addition to safekeeping, a central securities depository may incorporate
comparison, clearing and settlement functions.
1
Check
A retail payment instrument consisting of a written order from one party
(the drawer) to another party (the drawee, normally a bank) requiring
the drawee to pay a specified sum on demand to the drawer or to a
third party specified by a drawer.
Check Clearing for
the 21st Century Act
(aka Check 21)
A US law designed to foster innovation in the payments system and to
enhance its efficiency by reducing some of the legal impediments to
check truncation. The law facilitates check truncation by creating a new
negotiable instrument called a substitute check, which permits banks to
truncate original checks, to process check information electronically,
and to deliver substitute checks to banks that want to continue receiving
paper checks. The law does not require banks to accept checks in
electronic form nor does it require banks to use the new authority
granted by the Act to create substitute checks.
Check Conversion
Changes in private sector rules (or NACHA) allow the initiation of an
electronic automated clearinghouse payment from information on a
check.
Clearance
The process of transmitting, reconciling, and in some cases, confirming
payments orders or financial instrument transfer instructions prior to
settlement.
Clearing Corporation
(aka Clearinghouse)
A central processing mechanism through which financial institutions
agree to exchange payment instructions or other financial obligations
(e.g. securities). The institutions settle for items exchanged at a
designated time based on the rules and procedures of the clearing
corporation. In some cases, the clearing corporation may assume
significant counterparty, financial, or risk management responsibilities
for the clearing system.
Clearing Account
Deposit account held by banks and thrift institutions at the Federal
Reserve. Unlike reserve accounts, which institutions are required to
maintain, clearing accounts are held if their required reserve balances
are not large enough to cover the dollar volume of their check clearing
and other transfers of funds through the Federal Reserve.
Clearing House
Interbank Payments
System (CHIPS)
An electronic payments system that transfers funds and settles
transactions in U.S. dollars. CHIPS enables banks to transfer and settle
international payments more quickly by replacing official bank checks
with electronic bookkeeping entries.
Committee on
Payments and
Market
Infrastructures
(CPMI)
Continuous Linked
Settlement (CLS)
A committee of the BIS that serves as a forum for central banks to
monitor and analyze developments in domestic payment, clearing and
settlement systems as well as in cross-border and multicurrency
settlement schemes.
A process enabling simultaneous foreign exchange settlement across
the globe, eliminating the settlement risk caused by delays arising from
time-zone differences. CLS settles matched trades on a payment vs.
payment basis and multilaterally nets funding obligations.
2
Continuous Linked
Settlement (CLS)
Bank
CLS Bank is a multi-currency bank, holding an account for each
settlement member and an account at each eligible currency’s central
bank, through which funds are received and paid. Technical and
operational support is provided by CLS Services, an affiliate of CLS
Bank. CLS Bank is based in New York and is an Edge Corporation
bank supervised by the Federal Reserve.
Counterparty Risk
The risk to each party of a contract that the counterparty will not live up
to its contractual obligations.
A bank that holds deposits for other banks and performs services, such
as check clearing. The deposit balance is a form of payment for
services.
Correspondent Bank
Credit Risk
The risk that a counterparty will not settle an obligation for full value,
either when due or at any time thereafter. In exchange-for value
systems, the risk is generally defined to include replacement cost risk
and principal risk.
Credit Union
Financial cooperative organization of individuals who have a common
bond, such as place of employment or residence or membership in a
labor union. Credit unions accept deposits from members, pay interest
(in the form of dividends) on the deposits out of earnings and use their
funds to provide consumer installment loans to members.
An entity, often a bank, that safekeeps securities for its customers and
may provide various other services, including clearance and settlement,
cash management, foreign exchange, and securities lending.
Custodian
Custody Risk
The risk of loss of securities held in custody occasioned by the
insolvency, negligence or fraudulent action of the custodian or of a
subcustodian.
Daily Settlement
The completion of settlement on the day of value of all payments
accepted for settlement.
Daylight Credit
Credit extended for a period of less than one business day; in a credit
transfer system with end-of-day final settlement, daylight credit is tacitly
extended by a receiving institution if it accepts and acts on a payment
order even though it will not receive final funds until the end of the
business day. Also called daylight overdraft, daylight exposure and
intraday credit.
Daylight Overdraft
A negative position in an institution’s Federal Reserve account.
Dealer
A firm that enters into transactions as a counterparty on both sides of
the market in one or more products. OTC derivatives dealers are
primarily large international financial institutions – mostly commercial
banks but also some securities firms and insurance companies – as
well as a few affiliates of what are primarily non-financial firms.
Deferred Net
Settlement
(DNS)System
See Net Settlement System.
3
Delivery-vsPayments System
(DVP)
A system that ensures that the final transfer of one asset will
simultaneously occur if, and only if, the final transfer of another asset
(or other assets) occurs.
Depository
Facility for holding securities in either a certified or an uncertified
(dematerialized) form. Allows securities transfers through book-entry.
Depositories may also offer funds accounts and permit funds transfers
as a means of payment. Depositories may be privately or publicly
operated. The Depository Trust Company (DTC) is the largest American
securities depository and holds the majority of the equity, corporate
bond, and money market instruments issued in the United States.
Depository
Institution
An institution that holds funds or marketable securities, usually under a
specific agreement.
Depository Trust &
Clearing Corporation
(DTCC)
A holding company for a group of operating companies providing
securities clearance, settlement, custody and information services.
Subsidiaries include Depository Trust Company (DTC), National
Securities Clearing Corporation (NSCC), Fixed Income Clearing
Corporation (FICC), DTCC Solutions, DTCC Deriv/SERV, and Omega.
Depository Trust
Company (DTC)
Established in 1973, it was created to reduce costs and provide clearing
and settlement efficiencies by immobilizing securities and making
“book-entry” changes to ownership of the securities. It provides
settlement services for all NSCC trades and for institutional trades,
which typically involve money and securities transfers between
custodian banks and broker/dealers. DTC is a member of the U.S.
Federal Reserve System, a limited-purpose trust company under New
York State banking law and a registered clearing agency with the
Securities and Exchange Commission.
Dodd-Frank Act
A federal statute formally known as The Dodd-Frank Wall Street and
Consumer Protection Act, signed into law on June 21, 2010 by
President Obama. The Act, by definition, was established to promote
US financial stability by improving accountability and transparency in
the financial system, to end “too big to fail”, to protect the American
taxpayer by ending bailouts, to protect consumers from abusive
financial services practices, and for other purposes.
Corporation chartered by the Federal Reserve to engage in
international banking. The Board of Governors acts on applications to
establish Edge Act corporations and also examines the corporations
and their subsidiaries. Named after Senator Walter Edge of New
Jersey, who sponsored the original legislation to permit formation of
such organizations. See also agreement corporation.
A generic term describing any transfer of funds between parties or
depository institutions via electronic data systems. Automated Clearing
House (ACH) is an example of EFT.
Edge Act
Corporation
Electronic Funds
Transfer (EFT)
End-of-Day Gross
Settlement System
Funds transfer system in which payment orders are received one by
one by the settlement agent during the business day, but in which final
settlement takes place at the end of the day on a one by one or
aggregate gross basis. This definition also applies to gross settlement
systems in which payments are settled in real time but remain
revocable until the end of the day.
4
Federal Reserve Act
Federal Agency
Securities
Fedwire
The 1913 U.S. legislation that created the Federal Reserve System.
The amendments to the Federal Reserve Act suggest two roles for the
system: to promote monetary stability and high employment.
Interest-bearing obligations issued by federal agencies and
government-sponsored entities, such as the Federal Home Loan Banks,
the Federal Farm Credit Banks, the Federal National Mortgage
Association (Fannie Mae), the Federal Home Loan Mortgage
Corporation (Freddie Mac), and the Tennessee Valley Authority. Some
federal agency securities are backed by the U.S. government while
others are not.
An electronic transfer system developed and maintained by the Federal
Reserve System, enabling financial institutions to transfer funds and
book-entry securities nationwide.
Fedwire Funds
Service
Owned and operated by the Federal Reserve, the Fedwire Funds
Service provides a real-time gross settlement system in which more
than 9,500 participants initiate funds transfers that are immediate, final,
and irrevocable when processed. Participants that maintain a reserve or
clearing account with a Federal Reserve Bank may use Fedwire to send
payments to, or receive payments from, other account holders directly.
Participants use Fedwire to handle large-value, time-critical payments,
such as payments for the settlement of interbank purchases and sales
of federal funds; the purchase, sale, and financing of securities
transactions; the disbursement or repayment of loans; and the
settlement of real estate transactions.
Fedwire Security
Service
Owned and operated by the Federal Reserve, the Fedwire Securities
Service provides a real-time, delivery-versus-payment (DVP), gross
settlement system that allows for the immediate, simultaneous transfer
of securities against payment. It also provides participants with the
ability to maintain multiple securities accounts segregated for their own
use or their trust operations.
Finality
An irrevocable and unconditional transfer of payment which occurs
during settlement.
Financial Market
Infrastructure (FMI)
The infrastructures that facilitate the clearing and settlement of
monetary and other financial transactions, such as payments,
securities, and derivative contracts, including derivatives contracts for
commodities. Also known as Financial Market Utility (FMU).
The FSB was established to coordinate at the international level the
work of national financial authorities and international standard setting
bodies (SSBs) in order to develop and promote the implementation of
effective regulatory, supervisory and other financial sector policies.
A subsidiary of Depository Trust and Clearing Company (DTCC), FICC
is an industry service organization, designed to operate on a not-forprofit basis, whose primary purpose is to ensure orderly settlement in
the fixed income securities marketplace. FICC operates through two
divisions: one serves the U.S. government securities market, while the
other handles the mortgage-backed securities (MBS) market.
Financial Stability
Board (FSB)
Fixed Income
Clearing Corporation
(FICC)
Foreign Exchange
Settlement Risk (also
known as Herstatt
Risk)
The potential loss of principal associated with settling transactions
sequentially instead of simultaneously.
5
Funds Transfer
A series of transactions, beginning with the originator’s payment order,
made for the purpose of making payment to the beneficiary of the order.
Funds Transfer
System
A formal arrangement based on private contract or statute law, with
multiple memberships, common rules and standardized arrangements,
for the transmission and settlement of money obligations arising
between the members.
Group of Twenty
(G20)
The premier forum for international cooperation on the most important
aspects of the international economic and financial agenda. It brings
together the world’s major advanced and emerging economies. The
G20 includes 19 country members and the European Union, which
together represent around 90% of global GDP, 80% of global trade and
two thirds of the world’s population.
Haircut
The difference between the market value of a security and its collateral
value. Haircuts are taken by a lender of funds in order to protect the
lender, should the need arise to liquidate the collateral, from losses
owing to declines in the market value of the security.
International Central
Securities
Depository (ICSD)
A central securities depository that settles trades in international
securities and in various domestic securities, usually through direct or
indirect (through local agents) links to local CSDs.
International
Organization of
Securities
Commissions
(IOSCO)
Intraday Credit
An international organization comprised of securities market regulators.
Intraday Liquidity
Funds which can be accessed during the business day, usually to
enable financial institutions to make payments in real time.
Lamfalussy
Standards
The six minimum standards for the design and operation of crossborder and multicurrency netting schemes or systems.
Large-Value
Payments (LVP)
Payments, generally of very large amounts, which are mainly
exchanged between banks or between participants in the financial
markets and usually require urgent and timely settlement.
Large-Value Transfer
System
A type of wholesale payment system used primarily by financial
institutions in which large values of funds are transferred between
parties. Fedwire and CHIPS are the two large-value transfer systems in
the U.S.
Liquidity Risk
The risk that a counterparty (or participant in a settlement system) will
not settle an obligation for full value when due. Liquidity risk does not
imply that a counterparty or participant is insolvent since it may be able
to settle the required debit obligations at some unspecified time
thereafter.
Figurative expression for the informal network of dealers and investors
over which short-term debt securities are purchased and sold. Money
market securities generally are highly liquid securities that mature in
less than one year, often less than ninety days.
Money Market
See Daylight Credit.
6
Multilateral Netting
An arrangement among three or more parties to net their obligations. In
settlement systems of this type transfers are irrevocable, but are only
final after the completion of end-of-day-settlement.
NACHA
A not-for-profit association that develops operating rules and business
practices for the Automated Clearing House (ACH) Network and for
electronic payments in the areas of Internet commerce, electronic bill
and invoice presentment and payment, e-checks, financial electronic
data interchange, international payments, and electronic benefits
services.
National Securities
Clearing Corporation
(NSCC)
A wholly owned subsidiary of the Depository Trust & Clearing
Corporation (DTCC). It is a central counterparty that provides
centralized clearance, settlement and information services for broker-tobroker equity, corporate bond and municipal bond, exchange-traded
funds and unit investment trust (UIT) trades in the U.S.
National Settlement
Service (NSS)
A multilateral settlement service owned and operated by the Federal
Reserve Banks. The service is offered to depository institutions that
settle for participants in clearinghouses, financial exchanges and other
clearing and settlement groups. Settlement agents acting on behalf of
those depository institutions electronically submit settlement files to the
Reserve Bank. Files are processed on receipt, and entries are
automatically posted to the depository institutions’ Reserve Bank
accounts. Entries are final and irrevocable when posted.
Net Debit Cap
The maximum dollar amount of daylight overdrafts an institution is
permitted to incur in its Federal Reserve account. The exact dollar
amount is a multiple—determined by the Federal Reserve—of an
institution’s capital. Under current policy, institutions are subject to two
caps: a daily cap and a 2-week average cap. Net debit caps help
reduce the credit risk to the Federal Reserve and taxpayers by limiting
losses should an institution fail. In April 1994, as a supplement to the
existing net debit cap policy, Federal Reserve Banks began charging
fees to depository institutions for average daylight overdrafts in deposit
accounts with the Federal Reserve.
Net Settlement
System
A category of payments system. A system in which banks continually
send payment instructions over a period of time, with final transfer
occurring at the end of the processing cycle. During the period, a record
is kept of net debits and credits.
Nostro (or Nostro
Agent)
Originator
Nostro agents often act for several settlement members in an FMU.
Nostro agents have no formal relationship with FMU’s or with the user
members or third-party clients of the settlement member.
The risk of direct or indirect loss resulting from inadequate or failed
internal processes, people and systems or from external events.
Sender of the first payment order in a funds transfer.
Originator’s Bank
Receiving bank to which the originator’s payment order is issued.
Over-The-Counter
(OTC)
Figurative term for the means of trading securities that are not listed on
an organized stock exchange such as the New York Stock Exchange.
Over-the-counter trading is done by broker-dealers who communicate
by telephone and computer networks.
Operational Risk
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Payment
A transfer of value.
Payment Order
An instruction to a bank to pay or to cause another bank to pay a fixed
or determinable amount of money to a beneficiary.
Payment System
The mechanism—the rules, institutions, people, markets, and
agreements—that make the exchange of payments possible.
Payment-vs-Payment
(PVP)
A mechanism in a foreign exchange settlement system which ensures
that a final transfer of one currency occurs if and only if a final transfer
of the other currency or currencies takes place.
Pre-Settlement risk
The risk that a counterparty to an outstanding transaction for completion
at a future date will fail to perform on the contract or agreement during
the life of the transaction. The resulting exposure is the cost of replacing
the original transaction at current market prices and is also known as
replacement cost risk.
PSR Policy
The Federal Reserve’s Payments System Risk policy.
Queuing
A risk management arrangement whereby transfer orders are held
pending by the originator/deliverer or by the system until sufficient cover
is available in the originator’s/deliverer’s clearing account or under the
limits set against the payer; in some cases, cover may include unused
credit lines or available collateral.
Real-Time Gross
Settlement (RTGS)
System
A category of payments system. A system is said to operate in real-time
if each payment is processed as it is initiated—which provides
immediate finality—rather than in batch. This serves to reduce Herstatt
Risk. Gross settlement refers to the settlement of each transfer
individually rather than netting. Fedwire uses a real-time gross
settlement system.
Receiver Finality
When the obligation of the originator bank to pay the beneficiary is
discharged.
Repurchase
Agreement (aka
Repo)
Retail Payments
A contract to sell and subsequently repurchase securities at a specified
date and price.
Securities Settlement
System (SSS)
The full set of institutional arrangements for confirmation, clearance,
and settlement of securities trades and safekeeping of securities.
Settlement
The transfer of ownership involving the physical exchange of securities
or payment. In a banking transaction, settlement in the process of
recording the debit and credit positions of the parties involved in a
transfer of funds; in a financial instrument transaction, settlement
includes both the transfer of securities by the seller and the payment by
the buyer. Settlements can be “gross” or “net.” Gross settlement means
each transaction is settled individually. Net settlement means that
parties exchanging payments will offset mutual obligations to deliver
identical items, at a specified time, after which only one net amount of
each item is exchanged.
Small-dollar payments made in the goods and services market.
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Settlement Date
The date on which the parties to a transaction agree that settlement is
to take place.
Settlement Finality
When the sender’s obligation to pay its receiving bank is discharged.
Society for
Worldwide Interbank
Financial
Telecommunication
(SWIFT)
A cooperative organization created and owned by banks that operates a
network which facilitates the exchange of payment and other financial
messages between financial institutions (including broker-dealers and
securities companies) throughout the world. A SWIFT payment
message is an instruction to transfer funds; the exchange of funds
(settlement) subsequently takes place over a payment system or
through correspondent banking relationships.
Strength of Support
Assessment (SOSA)
ranking
SOSA rankings reflect an assessment of a Foreign Bank Organization’s
ability to provide financial, liquidity and management support to its U.S.
operations.
Substitute Check
A substitute check is the legal equivalent of the original check and
includes all the information contained on the original check.
Systemically
Important Financial
Institutions (SIFI)
Firms whose disorderly failure, because of their size, complexity and
systemic interconnectedness, would cause significant disruption to the
wider financial system and economic activity.
Systemically
Important
Payment System
A payment system is systemically important where, if the system were
insufficiently protected against risk, disruption within it could trigger or
transmit further disruptions amongst participants or systemic disruptions
in the financial area more widely.
Systemic Risk
The risk that the failure of one participant in a transfer system, or in
financial markets generally, to meet its required obligations will cause
other participants or financial institutions to be unable to meet their
obligations (including settlement obligations in a transfer system) when
due. Such a failure may cause significant liquidity or credit problems
and, as a result, might threaten the stability of financial markets.
Throughput
Requirements
Guidelines that require banks to submit certain percentages of the
payments the banks make for the whole day by specified times during
the day. Such throughput requirements can regulate the rate of turnover
of account balances.
Trade Repository
Authoritative registries of key information regarding open
over-the-counter (OTC) derivatives trades to mitigate the
opacity of OTC derivatives markets.
TARGET2 is the real-time gross settlement (RTGS) system owned and
operated by the Eurosystem.
TARGET2
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Tri-party Repo
Wholesale Payments
Warehouse Trust
A repurchase transaction in which a third party (tri-party agent)
facilitates the transaction by providing operations services, such as
custody of securities, settlement of cash and securities, valuation of
collateral, and optimization tools.
Large-value payments used primarily in the financial markets.
The Warehouse Trust Company LLC is a subsidiary of DTCC
Deriv/SERV LLC. The Warehouse Trust is regulated as a member of
the U.S. Federal Reserve System, and as a limited purpose trust
company by the New York State Banking Department. It operates
DTCC’s Trade Information Warehouse, which provides the market's first
and only comprehensive trade database and centralized electronic
infrastructure for post-trade processing of OTC credit derivatives
contracts over their lifecycles, from confirmation through to final
settlement.
10
ACH
BIS
CCP
CFTC
Check 21
CHIPS
CLS
CMO
CPMI (formerly
CPSS)
CSD
DDRL
DFA
DFMU
DLOD
DNS
DTC
DTCC
DVP
ECCHO
EFT
EPN
GSD
GSE
FSA
FBO
FI
FICC
FMI
FMU
FR
FRBNY
FSB
FSOC
FX
ICSD
IOSCO
KRI
LVP
MMIs
MBS
MBSD
NACHA
NDF
NSCC
NSS
NYSE
OC
OTCD
ODRF
ODSG
ORM
PCS
Automated Clearing House
Bank for International Settlements
Central Counterparty
Commodities Futures Trading Commission
st
Check Clearing for the 21 Century Act
Clearing House Interbank Payments System
Continuous Linked Settlement
Collateralized Mortgage Obligation
Committee on Payments and Market Infrastructures
Central Securities Depository
DTCC Derivatives Repository Limited
Dodd-Frank Act
Designated Financial Market Utility
Day-Light Over-Draft
Deferred Net Settlement
Depository Trust Company
Depository Trust & Clearing Corporation
Delivery-vs-Payments system
Electronic Check Clearing House Organization
Electronic Funds Transfer
Electronic Payment Network
Government Securities Division
Government Sponsored Entity
Financial Services Authority
Foreign Banking Organization
Financial Institutions
Fixed Income Clearing Corporation
Financial Market Infrastructure
Financial Market Utility
Federal Reserve
Federal Reserve Bank of New York
Financial Stability Board
Financial Stability Oversight Council
Foreign Exchange
International Central Securities Depository
International Organization of Securities Commissions
Key Risk Indicators
Large-Value Payments
Money Market Instruments
Mortgage-Backed Securities
Mortgage-Backed Securities Division
Electronic Payments Association
Non-Deliverable Forward
National Securities Clearing Corporation
National Settlement Service
New York Stock Exchange
Oversight Committee
Over-the-counter derivatives
OTC Derivatives Regulators’ Forum
OTC Derivatives Supervisors Group
Operational Risk management
Payment, Clearing and Settlement
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PFMIs
PS
PSPAC
PSR
PVP
P2P
RTGS
SEC
SOSA
SIFI
SSS
SWIFT
TARGET
TIW
TPR
TR
UCC
UST
WT
2012 CPSS-IOSCO Principles for Financial Market Infrastructures
Payment System
Payment System Policy Advisory Committee
Payments System Risk
Payment-vs-Payment
Person-to-Person
Real-Time Gross Settlement
Securities and Exchange Commission
Strength of Support Assessment
Systemically Important Financial Institutions
Securities Settlement System
Society for Worldwide Interbank Financial Telecommunication
Trans-European Automated Real-time Gross settlement Express Transfer
Trade Information Warehouse
Tri-Party Repo
Trade Repository
Uniform Commercial Code
US Treasury
Warehouse Trust
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Payment System Policy and Oversight Course
Federal Reserve Bank of New York
33 Liberty Street, 12th Floor Conference Center
(Final Day: Course moves to 13th Floor – Multi Purpose Room)
May 11-14, 2015
Reference Guide
Federal Reserve regulations and policies:
1. Policy on Payment System Risk, October 2014
http://www.gpo.gov/fdsys/pkg/FR-2014-11-13/pdf/2014-26791.pdf
2. Regulation HH, October 2014
http://www.gpo.gov/fdsys/pkg/FR-2014-11-05/pdf/2014-26090.pdf
BIS publications:
1. Principles for financial market infrastructures (PFMIs), April
2012 http://www.bis.org/cpmi/publ/d101.htm
2. PFMIs, disclosure framework and assessment methodology, December 2012
http://www.bis.org/cpmi/publ/d106.pdf
3. Implementation monitoring of PFMIs - Level 2 assessment reports for central
counterparties and trade repositories - US, Japan, EU, February 2015
http://www.bis.org/cpmi/publ/d126.htm
http://www.bis.org/cpmi/publ/d127.htm
http://www.bis.org/cpmi/publ/d128.htm
4. Implementation monitoring of PFMIs - Level 1 assessment report, August 2013
http://www.bis.org/cpmi/publ/d111.pdf
5. Public quantitative disclosure standards for central counterparties, February 2015
http://www.bis.org/cpmi/publ/d125.htm
6. Assessment methodology for the oversight expectations applicable to critical service
providers, December 2014
http://www.bis.org/cpmi/publ/d123.htm
7. Statistics on payment, clearing and settlement systems in the CPSS countries,
figures for 2013, December 2014
http://www.bis.org/cpmi/publ/d124.htm
8. Cyber resilience in financial market infrastructures, November 2014
http://www.bis.org/cpmi/publ/d122.htm
9. Recovery of financial market infrastructures, October 2014
http://www.bis.org/cpmi/publ/d121.htm
10. Developments in collateral management services, September 2014
http://www.bis.org/cpmi/publ/d119.htm
11. Non-banks in retail payments, September 2014
http://www.bis.org/cpmi/publ/d118.htm
12. Authorities' access to trade repository data, August 2013
http://www.bis.org/cpmi/publ/d110.pdf
13. Supervisory guidance for managing risks associated with the settlement of foreign
exchange transactions, February 2013
http://www.bis.org/publ/bcbs241.pdf
14. Final report on OTC derivatives data reporting and aggregation requirements,
January 2012
http://www.bis.org/cpmi/publ/d100.htm
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15. Report on Trading of OTC derivatives, February
2011 http://www.iosco.org/library/pubdocs/pdf/IOSCOPD345.pdf
16. Strengthening repo clearing and settlement arrangements, September 2010
http://www.bis.org/cpmi/publ/d91.htm
17. The Interdependencies of Payment and Settlement Systems, June
2008 http://www.bis.org/cpmi/publ/d84.htm
18. Progress in reducing foreign exchange settlement risk, May
2008 http://www.bis.org/cpmi/publ/d83.htm
19. Developments in Clearing and Settlement Arrangements for OTC Derivatives, March
2007
http://www.bis.org/cpmi/publ/d77.htm
20. General Guidance for National Payment System Development, Jan
2006 http://www.bis.org/cpmi/publ/d70.htm
21. Developments in Large Value Payment Systems, May
2005 http://www.bis.org/cpmi/publ/d67.htm
22. Central Bank Oversight of Payment and Settlement Systems, May
2005 http://www.bis.org/cpmi/publ/d68.htm
23. The role of central bank money in payment systems, August 2003
http://www.bis.org/cpmi/publ/d55.htm
Central bank payment system information from the CPMI (formerly CPSS):
1. Reference to all central bank payment system information
http://www.bis.org/cpmi/paysysinfo.htm
2. Reference to U.S. payments systems in the CPSS’ red
book http://www.bis.org/cpmi/paysys/unitedstatescomp.pdf
Other references:
1. Payments Risk Committee
http://www.newyorkfed.org/prc/
2. Financial Sector Assessment Program (FSAP) country reports
http://www.imf.org/external/NP/fsap/fsap.asp#C
3. Tri-party Repo Infrastructure Reform
http://www.newyorkfed.org/banking/tpr_infr_reform.html
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